Explore BrainMass

Explore BrainMass

    Calcuating Effective Annualm Rate (EAR)

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Calculating EAR. First National Bank charges 12.6 percent compounded monthly on its business loans. First United Bank charges 12.8 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan?

    © BrainMass Inc. brainmass.com June 3, 2020, 5:47 pm ad1c9bdddf

    Solution Preview

    We need to calculate the Equivalent Annual Rate. Let us assume we borrow $100, then the compound interest formula for First National Bank ...

    Solution Summary

    The solution explains how to calculate the EAR with different compounding frequency